H-P’s Autonomy Debacle: Five Takeaways From This Morning’s Earnings

So much for a slow news day before the holiday: Hewlett-Packard is citing Autonomy in an $8.8 billion write-down and accusing the company it purchased of “accounting improprieties.”

The stock is getting hammered this morning after its fourth-quarter earnings announcement, down more than 10%. On paper, the quarter didn’t appear to be that bad — aside from the, well, fraud accusation.

Here’s the bit from the release about Autonomy:

The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP’s acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term. The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge.

H-P is going straight for the jugular for the Autonomy misstep. Meg Whitman, H-P’s chief executive, said the company has informed the Securities and Exchange Commission, as well as the U.K.’s Serious Fraud Office, according to a report in The Wall Street Journal. ”We have requested both agencies open criminal and civil investigations into this matter,” she said, according the WSJ. “H-P intends to seek regress against various parties in the appropriate civil courts to recoup what we can for our shareholders.”

Printing revenue declined 5% year-over-year, with most of the damage coming in the consumer sector. Total hardware units were down 20% year-over-year, according to the company. Commercial units were down 15% year-over-year, and Consumer units were down 22% year-over-year. With many people carrying around smartphones and tablets, it might just be unnecessary to buy printers at this point.

Two swings, two misses. Autonomy is H-P’s second big whiff in recent memory, after the company decided to wind down its acquisition of Palm, a smartphone developer behind the Palm Pre. The year-earlier period included $885 million of charges tied to H-P’s decision to wind down its webOS device business following the acquisition of Palm, according to the Journal’s report.

Personal Systems revenue was down 14% year-over-year. Total units were down 12% with both Desktops and Notebooks units down 12%. This comes on the heels of an earlier report in which Gartner said the world-wide PC shipments shrank 8.3%, while IDC reports PC shipments shrank 8.6%, in the third quarter this year when compared to the same period a year earlier.